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Saturday, May 6, 2017

Coming up soon steel plants with private players on PSU land

IN AN innovative move, the government is planning to set up new steel plants on surplus land available with PSUs by entering into partnerships with the private sector. This will enable the government to more than double steel production capacity to 300 million tonnes by 2030.
The Cabinet on May 3 approved the New Steel Policy that aims to achieve 300 million... tonnes of capacity by 2030 with an additional investment of Rs 10 lakh crore.
At present, the steel production capacity is 126 million tonnes.
Stating that the land acquisition is an issue under the new law, Steel Minister Chaudhary Birender Singh said the government plans to make use of the surplus land of steel PSUs to set up new plants through joint ventures with private firms. “If we have to create steel-making capacity of 300 million tonnes, we cannot wait for [a] long time,” he said.
Singh said the share of PSUs and private companies is expected to remain at the present level in future capacity addition. At present, the PSUs contribute 19 per cent to the total country's production capacity.
He favoured vertical development for making the best use of the land.
Steel Secretary Aruna Sharma said the government is working out a mechanism to utilise the surplus land of PSUs for creating steel-making clusters in joint venture with private firms, including foreign companies.
"These will be clean land available to them (private companies)," Sharma said, adding the PSUs could contribute land as equity in the joint venture (JV).
On NPAs in steel sector, the secretary said it is in the last stage of getting resolved and mentioned about the Cabinet approving issuing an ordinance to amend Banking Regulation Act in this regard.
The proposed joint venture between state-owned SAIL and ArcelorMittal to set up a Rs5,000 crore auto-grade steel plant may be finalised this month, the minister said.
“May is the last month to click or not to click. We may clinch this deal,” the Minister told reporters here when asked about the joint venture.
The steel minister expected that the demand for domestic steel would rise significantly after the Cabinet yesterday approved the policy for providing preference to domestically manufactured iron & steel products in government procurement.
"In this year, the government has budgeted Rs 4 lakh crore for infrastructure development. If even 10 per cent of this investment is on steel consumption, then there will be huge demand for domestic steel," Singh said.
He expected this policy to boost FDI in steel sector as foreign companies would consider setting up plants in India.
The government agencies can use imported steel only if it is not available in India, the minister said.
This policy seeks to give preference to Domestically Manufactured Iron & Steel Products (DMI & SP) in the government projects. It is applicable on all government tenders where price bid is yet to be opened.
Singh said the government is also working towards reducing the imports of coking coal and other raw materials by increasing domestic availability at competitive rate.
The new steel policy favours domestic manufacturers in government projects.
“All government tenders will give preference to domestically manufactured iron and steel products. There will be a condition in it (tender) so that the surplus capacity is consumed,” said finance minister Arun Jaitley.